The Accounting Review Vol. 51 No. 3 1976
Another Approach to Allocating Joint Costs: A Comment.
Abstract
The article presents comments of the author on the article "Another Approach to Allocating Joint Costs," by Moriarity. The purpose of this note is to show that the allocation method proposed by Shane Moriarity contains a serious conceptual error. Because it fails to distinguish internal incremental costs from internal joint costs, the application of' his method in some situations will produce dysfunctional results. Another method is proposed that explicity considers the existence of incremental costs involved in providing a good or service internally, as well as joint costs. The mathematical form of the method to be presented here was derived from one proposed by scholar Arthur L. Thomas for allocating joint costs to joint products, although its details and rationale differ. Moriarity proposes that the savings from incurring joint costs be allocated to the goods or services obtained internally and that these savings be subtracted from the external cost of each good or service to determine the total cost.
- DOI
- 10.2308/tar-4482356
- Volume
- 51
- Issue
- 3
- Pages
- 683-685
- Language
- en
- Sources
- openalex crossref